Understanding Fraud Liability for EMV Contact and Contactless Transactions in the U.S.

Publication Date: February 2019

EMV has been implemented in the United States, as it has in other countries, with the goal of reducing card-present fraud. Changes in payment network rules seek to support the migration to EMV by placing liability for fraud – counterfeit, and in the case of most networks, also lost or stolen – with the party to the transaction that has not successfully transitioned to EMV chip technology.

Most U.S. payment networks have implemented EMV fraud “liability shifts,” effective October 2015, for POS transactions. Some networks also have either implemented or announced liability shifts for ATMs and/or automated fuel dispensers (AFDs). With these liability shifts, many card issuers, merchants, acquirers and processors implementing EMV chip technology are asking, “Who is liable for what, and when, under these fraud liability shifts?”

The U.S. Payments Forum is providing information collected from certain payment networks to help payment industry participants better understand the corresponding network’s policies. This document includes details for each of the networks participating regarding their respective liability shifts for counterfeit and lost-or-stolen fraud, for POS devices, ATMs, and AFDs. The liability policies documented in the white paper were developed by the payment networks independently and provided to the Forum to summarize the policies for industry stakeholders. The white paper also includes information on technical fallback and manual key-entered transactions, cross-border transactions and mobile and contactless transactions.

The version 3.0 white paper (published in February 2019) includes expanded content on counterfeit and lost-or-stolen fraud liability for contactless transactions.

The document covers common scenarios and only those payment networks that provided information to the U.S. Payments Forum in the preparation of this document. There are other scenarios that could affect liability that are not covered in this document and other networks that did not provide information that may have liability shifts. Merchants, acquirers, processors and others implementing EMV chip technology in the U.S. are therefore strongly encouraged to consult with their respective payment networks regarding applicable liability shifts and rules.

When considering the respective liability shifts described above, it helps to first define the type of fraud, and then assess the technology being employed by the applicable parties in light of applicable payment network rules. In summary, the party supporting the superior technology for each fraud type will prevail in a chargeback (for the scenarios specifically addressed above and except as otherwise noted); and in case of a technology tie, the fraud liability is generally unchanged and remains as it is today – with the issuer.

Please note: The information and materials available on this web page (“Information”) is provided solely for convenience and does not constitute legal or technical advice. All representations or warranties, express or implied, are expressly disclaimed, including without limitation, implied warranties of merchantability or fitness for a particular purpose and all warranties regarding accuracy, completeness, adequacy, results, title and non-infringement. All Information is limited to the scenarios, stakeholders and other matters specified, and should be considered in light of applicable laws, regulations, industry rules and requirements, facts, circumstances and other relevant factors. None of the Information should be interpreted or construed to require or promote the establishment of any solution, practice, configuration, rule, requirement or specification inconsistent with applicable legal requirements, any of which requirements may change over time. The U.S. Payments Forum assumes no responsibility to support, maintain or update the Information, regardless of any such change. Use of or reliance on the Information is at the user’s sole risk, and users are strongly encouraged to consult with their respective payment networks, acquirers, processors, vendors and appropriately qualified technical and legal experts prior to all implementation decisions.

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